TIGA proposes tax reforms for smaller UK games companies
TIGA has published a document proposing reforms to the UK's Research and Development tax credit system, hoping to squeeze up to 75 percent more value out of the scheme for games companies.
TIGA CEO Richard Wilson said the R&D scheme should extend to smaller businesses.
"TThe UK video games industry is a high tech, highly skilled and export oriented industry that needs the right support from Government to continue to flourish" he said.
"The R&D tax credits system should be reformed to promote additional investment in R&D particularly in small and medium sized enterprises. We call on the Government to support the UK video games industry by introducing TIGA’s proposals to improve the R&D tax credits in the forthcoming Budget."
Rebellion's Jason Kingsley said the Government should "look seriously" at the proposals. His sentiments were echoed by MP Stephen Timms, who described the UK's games scene as a "billion pound, world leading industry".
Economic and political types may get something out of the details of proposed reforms below.
IGA is the UK's games industry trade association. Britain's new budget will be settled on March 23.
- Scope: The scope of R&D tax credits credit should be expanded to include other associated costs incurred in the development of a new game: premises costs, the costs of applying for IP protection and design costs.
- Rate of relief: The rate of relief under the SME R&D tax credit scheme should be increased from 175% of qualifying expenditure to at least 200%. This would mean that for every pound that an SME spends of qualifying expenditure it would get two pounds of tax deduction which it would use to reduce its corporation tax.
- Assistance for loss making companies: SME R&D tax relief should be reformed to help loss making companies. At present, loss making businesses receive 24p for every £1 spent on qualifying expenditure. This should be increased to 28p for every £1 spent, so that loss making, R&D intensive firms also share in our proposed rate of relief.
- Process: The claims process should be simplified. Developers should have a named contact within their HMRC R&D Unit to approach with questions about the eligibility of their costs and activities. Further, it would be helpful if the Government could speed up the delivery of the R&D tax relief, which is of course a retrospective form of assistance, and commit to a deadline for approval and settlement of each claim.